What is its built-in gains tax

Reference no: EM13768033

Lockhart Corporation is a calendar-year corporation. At the beginning of 2013, its election to be taxed as an S corporation became effective. Lockhart Corp.'s balance sheet at the end of 2012 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation):

Asset	Adjusted Basis	FMV
Cash	$ 35,000	$ 35,000
Accounts receivable	25,000	25,000
Inventory	180,000	210,000
Land	125,000	120,000
Totals	$365,000	$390,000

Lockhart's business income for the year was $65,000 (this would have been its taxable income if it were a C corporation).

During 2013, Lockhart sold all of the inventory it owned at the beginning of the year for $250,000. What is its built-in gains tax in 2013? Be sure to show your work.
Assume the same facts as in part (1), except that if Lockhart were a C corporation, its taxable income would have been $17,000. What is its built-in gains tax in 2013? Be sure to show your work.
Assume the original facts except the land was valued at $115,000 instead of $120,000. What is Lockhart's built-in gains tax in 2013? Be sure to show your work.

Reference no: EM13768033

Questions Cloud

Describe the legal foundation of criminal procedures : Explain the legal foundation of criminal procedures, with reference to the definition and structure of law, the court system, federalism and the special role of the Supreme Court

Reducing or preventing workplace stress : What are the 3 major factors that contribute to Job Stress? List 5 methods for reducing or preventing workplace stress?

The ethical code of conduct for employees and vendors : The ethical code of conduct for employees and vendors, Guidelines for adherence to EEOC, ADA, and Civil Rights laws, Distinguishing between right and wrong in business dealings and when an action is legal

Proteins, carbohydrates, fats, or fiber contribute to health : Does your diet meet the minimum number of servings of foods from each fiber-containing group? If not, which of the fiber-containing groups--fruits and vegetables--fell short of the recommended intake.

What is its built-in gains tax : During 2013, Lockhart sold all of the inventory it owned at the beginning of the year for $250,000. What is its built-in gains tax in 2013? Be sure to show your work.

What influences could this child have had in his short life : What influences could this child have had in his short life that would explain why he acted this way? Is his family wrong to leave him in jail? What other things are going through your mind

Who has finished his or her llb degree : The topic of your assignment is: International ABC Law Office is looking for an attorney candidate, who has finished his/her LL.B. degree, is about to finish his/her legal internship and has excellent English skills

Assignment on multinational corporation expansion : Imagine that you are a senior business manager for a U.S.-based multinational company. You have been informed by your supervisor that your Company needs to consider expanding into a new international market to seek new opportunities.

User Account

All Pages